Waiting to see the impact of expanded CBOT position limits with regard to Deutsche Bank's ETF positions on MGEX.
May be waiting for a few days.
Tuesday, January 17, 2012
Tuesday, January 10, 2012
Raising the White Flag
Surrendered more of my long MGEX/short CBOT position today. One factor is the general commodity index rebalancing spurring some CBOT buying, and another is the rebalancing away from MGEX as reported by DTN, and finally, there's a big USDA report Thursday the 12th.
Better to have more flexibility to trade over the next week than to try to predict the outcomes of these uncertain events.
Better to have more flexibility to trade over the next week than to try to predict the outcomes of these uncertain events.
Monday, January 9, 2012
More Crumbling....
With buyers on the CBOT due to non-commercial short-covering ahead of the USDA report Thursday and also an annual commodity index rebalancing, the MGEX did not keep pace in today's rally. But maybe it's worse than that; the cash market premiums have fallen just as fast and the calendar spreads' backwardation has nearly disappeared.
So...not much demand for cash spring wheat and futures markets focused on buying CBOT has been a recipe for disaster for long MGEX/short CBOT positions like mine. Oh dear.
I've cut half of it and kept only July12 MGEX--which is at a reasonable $1.20 premium at this stage. At least i think it's reasonable
So...not much demand for cash spring wheat and futures markets focused on buying CBOT has been a recipe for disaster for long MGEX/short CBOT positions like mine. Oh dear.
I've cut half of it and kept only July12 MGEX--which is at a reasonable $1.20 premium at this stage. At least i think it's reasonable
Wednesday, January 4, 2012
MGEX Premium Crumbles
After yesterday's hard sell-off in March12 MGEX futures, it wasn't surprising to see that the weekly inventory numbers from Duluth showed that wheat is building there and not moving out. http://www.mgex.com/grain_historical.html
The price action in MGEX wheat yesterday was also crushing for the hopes of MGEX longs--a big move up early only to fail spectacularly into the close. Misery.
So March MGEX has lost $1 versus CBOT in about 6 weeks. Dump it? Well, I think no. The short-covering on CBOT has run perhaps half its course, while net longs at MGEX at very low. Inventories are still quite small for Spring Wheat while overall wheat inventories at very high. I like MGEX to outperform at paying $1.20 to $1.30 premium for July doesn't seem excessive when cash market premiums ares till $2.20 to $2.30.
Sticking with the MGEX.
The price action in MGEX wheat yesterday was also crushing for the hopes of MGEX longs--a big move up early only to fail spectacularly into the close. Misery.
So March MGEX has lost $1 versus CBOT in about 6 weeks. Dump it? Well, I think no. The short-covering on CBOT has run perhaps half its course, while net longs at MGEX at very low. Inventories are still quite small for Spring Wheat while overall wheat inventories at very high. I like MGEX to outperform at paying $1.20 to $1.30 premium for July doesn't seem excessive when cash market premiums ares till $2.20 to $2.30.
Sticking with the MGEX.
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